Market and product

Polypropylene (PP) prices in some parts of Africa may have peaked following initial May hikes in North and East Africa, sources said on Tuesday.

PP prices in Asia, particularly for homopolymer grades, have been stable to soft as Chinese demand has dwindled amid increasing domestic production in the country.

North African PP homopolymer prices were assessed at $1,080-1,110/tonne CFR (cost and freight) North Africa on 4 May, according to ICIS.

However, a trader serving the North African region said on 9 May that the highest price it was able to sell at was $1,070-1,080/tonne CFR, with the low end at $1,040/tonne CFR North Africa.

“The maximum price is no more than $1,070-1,080/tonne CFR. Above $1,100/tonne CFR, I just don’t hear it,” the trader said.

“I hear that $1,040-1,050/tonne CFR [North Africa] levels are available… spot prices are down,” the trader added.

This sentiment was shared by a second trader in the market, who warned that buyers may now be sitting on the side-lines in expectation of lower prices in coming weeks.

“Demand is slow [and] prices seem to peak, and suppliers seem to have more difficulties to place orders without small discounts,” the trader said, adding: “Buyers are fearing a price slump in the coming weeks, so are quite reluctant to buy.”

Even a Middle Eastern producer serving Africa said it saw prices falling overall in May.

Talking of the East African market, a trader there said it felt there will be no further increases in May because of good availability amid slowing demand in the region.

“Middle Eastern producers compared to last month increased the prices but don’t think they’ll increase further,” the trader said.

Gulf Cooperation Council (GCC) Middle Eastern prices saw gains on 6 May because of limited supply, and it may be due to this lack of availability in the run up to the religious fasting month of Ramadan on 6 June that led to producers approaching the African markets with higher offers.

However, African demand is not at the same levels as the Middle East, and the region may not see as large an impact from Ramadan as the Middle East.

“Demand is not that great, [we are] not getting enquiries from end users. Collection is a major issue, especially downstream,” the trader said, adding some end user customers are not paying for material, though it was not clear if this was due to a lack of US dollars in the region as seen in other parts of Africa.

East African demand is not expected to pick up in coming months due to the heavy rains the region is currently experiencing.

A PP converter in Kenya said the market was quiet and business was a bit slower this week as a direct result of the rains.

Market participants are sure to keep watch on the currently falling Asian price levels, which will no doubt add to the bearish sentiment in some African markets.